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A Practical Approach To Medical
Technology Capital Planning
Session #238, February 14, 2019
Ilir Kullolli, CTBE Director, Stanford Children’s Health
Chris Gutmann, ITS Director CE, YNHHS
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Chris Gutmann, MS
Ilir Kullolli, MS
Has no real or apparent conflicts of interest to report.
Conflict of Interest
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Introductions
Learning Objectives
Technology Challenges
Organizing Clinical Engineering
Assessment and Planning
Capital Strategy
Modernization with Security
Execution of Capital Planning
Total Cost of Ownership
Process in Flowchart
Device Security – FDA influence
Closing Remarks
Agenda
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• Identify ways to drive Capital Medical Systems acquisitions
• Analyze two approaches to Capital Planning while keeping
in mind Cybersecurity, Integration, TCO, and Interoperability
• Define a path to proper planning while considering Clinical,
IT, Clinical Engineering and Administrative needs
• Detect nuances on the effects of Cybersecurity, Integration,
and Interoperability on Long Term Capital Planning
Learning Objectives
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Stanford Children’s Health
Stanford Children’s Health (SCH) is the only medical network in the area, & the country,
exclusively dedicated to pediatric & obstetric care.
Network of more than 1,000 physicians across 60 locations.
At the heart of our healthcare system is Lucile Packard Children’s Hospital Stanford,
which is internationally recognized for advancing leadership & innovation with family-
centered care of newborns, children, & expectant mothers.
Multiple Awards (Davies, Stage 7, Most Wired, Best IT Department,, etc.)
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Technology challenges
Financial Constraints:
– Economic Forces and
Regulations
– Technological Advances
– New Technologies (i.e.
Telehealth, nanomedicine,
imaging technologies, etc.)
– Place of Healthcare Delivery
(home, hospital, clinics, etc.)
– Complex Technologies to
Deliver Appropriate Care
(integration, security, etc.)
Near- Term Long Term
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Clinical Engineering
Roles and Responsibilities
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• Status Quo Clinical Engineering org structure
– Focus on preventive maintenance, repairs, and technology
replacements and equipment breaks/no longer functional
Previous Org Structure (no CSE)
Ilir Kullolli
Director, Clinical Technology and
Biomedical Engineering
Manager
Manager
1 Clinical Systems
Engineer (overseeing
CPACS)
Technicians
VP and Associate CIO
Technicians
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• CSE Team of 6 created due to:
– Device integration
– Networking of systems
– Technology planning
– CyberSecurity Focus
– Highly skilled
– Quick escalations
– SWAT interventions
New Org Structure (with CSE)
Project Manager
New Hospital
Ilir Kullolli
Director, Clinical Technology/
Biomedical Engineering
Manager CDS
Manager OR/Nursing/RT
VP & Associate Chief
Information Officer
Systems Engineering
Team
Technicians
Technicians
Manager, Clinics and
Technology Plan
Technicians
Analyst
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• Managing Equipment Lifecycle
• Medical Equipment and Technology Assessment
• Medical Equipment and Technology Replacement Planning
• Execution of Replacement Plan / Communication
• Project Management
• Communicating with Senior/Executive Leadership
Technology assessment and
planning
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Assumption of Chief Executives - their clinical engineering team has
been built with the tools to facilitate their planning activities.
Capital Strategy Expectation
Executives’ strategy is based upon
macro-economics of the overall long
term objectives for the Health System.
Clinical Engineering planning has
support aspects in each service line
that are unique, often clashing with
macro algorithms and over
simplification. CE must package
projects that serve both needs.
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Medical Technology in Future tense
Humans are the only creatures with the ability to dive deep in the
sea, fly high in the sky, send instant messages around the globe,
reflect on the past, assess the present and imagine the future.
- Sylvia Earle
EHR
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Finite capital allocations burdened with financial constraints such as
measures of cash flow, carryover from previous years, strain of
growth strategy, physician recruitment, etc.
Look to your CE department to be open to all inputs/distributions
needed from “capital pie”
1. Replacement
● Patient Safety, Liability, End of Life
2. Growth
● New construction, Acquisition agreements
3. Strategic
● Physician Recruitment, Local Government
Capital Strategy from the C-Suite
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How are Business Cases built in your Health System?
• Patient Experience
• Ensure all costs are included:
– Equipment
– Resources
– Licensing (interfaces, database, inter-vendor)
– Virtualization in the data center
– Barcode Scanners?
– Access to an EHR workstation?
– Mobile access to EHR?
• Total Cost of Ownership
Modernization is the Goal
Clinical Systems:
- Infrastructure
(Transport)
- FDA approved
Medical Device?
- Compute:
Virtual/Physical
Life Cycles of
equipment are not
all created equal:
PC: 3-4 years
Med Device: 7-12
Server: 5 years
Upgrade v. Replace?
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Medical Device Security
• Threats to our medical information across
the health system occur both in the
physical and logical movement of patient
information
• Medical device systems provide a unique
risk through some
– Operating systems’ age (FDA
approvals)
– Ports on devices for peripherals
– Emerging consumer device platforms
– Configuration files
– Software updates
• Financial burden in both updating old as
well as ensuring security on the new
devices
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Mechanics of Execution
• Utilize Software and ERP, to consolidate equipment purchasing. This
allows execution of the C-suite strategic vision without administrative waste
(delays).
• Stratification of equipment in multi factorial method
– 250% life expectancy – Primary Care Environment
– 150% life expectancy – Med/Surg, ICU, HVC
– 75% life expectancy – Translational Medicine
• Anecdotal drivers - safety incidents, statistical deviation of cost
• Delivery Network capital committees aligning
– Each Delivery Network: different lens at similar issues
• Information Security
– Added costs to the project that need accounting up front
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Mechanics of Execution
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Capital Plan by the Numbers
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Vendor Partnership v. Transaction
Many large OEM vendors have business
markets in different clinical service lines.
Ask yourself are our clinical service lines
aligned in efforts of technology? Is the
presenting OEM truly aligned to us and our
multi-disciplinary needs?
The balance of when to strike partnership
level (agreed revenue targets) vs.
transactional (health system determines
purchase based on available capital)
What are the tipping points? $, cross over,
Analytics, Infrastructure, Clinical Alignment
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Operating Costs Considerations
• Cost of Service Ratio (COSR)
– Yearly Service Cost /
Acquisition Cost
• Total Cost of Ownership (TCO)
– Yearly Service Cost x LE +
Acquisition Cost
Acquisition
Cost
Yearly
Service
Costs
Life
Expectancy
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Keeping the TCO Mindset
Upfront
Investment
Upfront
Investment
•Purchase Price
•Installation Costs
•Clinical and Biomed Training
•Networking/Integration
•Configuration
Continued
Support
Continued
Support
•Parts Costs
•Consumables costs
•Biomed Support
•IT/Integration Support
•Security Patching and Upgrades
Hidden
Costs
Hidden
Costs
•Power and Networking expenses
•Replacement Planning
•Security issues as equipment gets older
•Negotiating service with Manufacturer as equipment gets older
•Change Management
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Development of Plan
Develop Technology
Plan
Review with
Department Leaders,
IT, Facilities, etc.
Adjust Technology
Plan
Submit for Approval
Make Final
Adjustment
Execute Technology
Plan
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Technology Planning Committees
Physiologic Monitoring
Anesthesia
Respiratory
Patient
Monitoring
Cardiovascular
NICU
Medical Imaging
Radiology
Nuclear
Medicine
IR/Ultrasound
EP/Cath Lab
Medical, Surgery,
and Scopes
Surgery
Sterilization
OB Services
Scopes
Physician Co-Chair and Nursing/Operations Co-Chair
• Lead Strategic Planning
• Determine clinical outcomes
• Collaborate on creation of business cases
• Promote the Technology Plan with their peers
• Determine impact (financial and/or operational)
• Define utilization and help adhere to it
• Determine initiatives to be funded (research, etc.)
Clinical Technology and Biomedical Engineering
• Manage current Medical Equipment Inventory and provide Service
History Data
• Provide replacement recommendations based on allocations and
service history
• Work with Analytics team and/or vendors to obtain Utilization
Information (when available)
• Facilitate technology evaluations (coordinate with vendors,
department, etc.)
• Communicate, coordinate, and implement Technology Plan
• Obtain data from IS, Construction, vendor to provide TCO
• Facilitate committee meetings
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Process Driven Planning
Download List from CMMS
based on AHA Life Expectancy
Review List and Repair Orders/Service
History for these devices
Does service
history show need
for replacement?
Is Equipment at
End of Life?
No
Is there a new
Clinical Initiative
that warrants
replacement?
No
Based on Inventory
count and allocation, do
we need to replace it?
Yes
Remove from Service and
Decommission Device
No
Do not Include in Replacement. Mark
device for Next Year Review
No
Include in Clinical Technology Plan
Yes
Yes
Y es
Equipment with known issues and
extensive Service History, but not at Life
Expectancy
Additional Equipment and New Initiatives
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Planning for replacement
Download List from CMMS
based on AHA Life Expectancy
Review List and Repair Orders/Service
History for these devices
Does service
history show need
for replacement?
Is Equipment at
End of Life?
No
Is there a new
Clinical Initiative
that warrants
replacement?
No
Based on Inventory
count and allocation, do
we need to replace it?
Yes
Remove from Service and
Decommission Device
No
Do not Include in Replacement. Mark
device for Next Year Review
No
Include in Clinical Technology Plan
Yes
Yes
Y es
Equipment with known issues and
extensive Service History, but not at Life
Expectancy
Additional Equipment and New Initiatives
Equipment with
Security Risks
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Planning for Security Risks
Download List from CMMS
with Equipment that has outdated
software/Security Risks
Can the Software
be Updated in
these Devices?
Are they on the
network?
No
Is there a contingency
plan for them (i.e. Cisco
ISE, restrictions, etc.)?
Proceed to Clinical Technology Plan
No
Do not Include in Replacement. Mark
device for Next Year Review and work on
restricting access
Yes
No
Yes
Yes
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• Equipment Lifecycle – Process
– New Technologies
– Existing Refresh
• Create Committees to Review Capital Needs
• Create a List of “Must Do” vs. “Nice to Do”
• Rank Equipment Needs
– Criticality
– Utilization Data
– Service History Data
– Inventory and Allocation Data
• Develop a Long Term Plan (5-10 year Plan)
Developing the Plan
Develop Technology
Plan
Review with
Department Leaders,
IT, Facilities, etc.
Adjust Technology
Plan
Submit for Approval
Make Final Adjustment
Execute Technology
Plan
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Shift in Blame – Device Security
2012
Feb
2019
2016
“The FDA won’t let
us fix it”
- Medical Device Vendors
“No one is enforcing safe
biomedical devices”
- Information Services Department
“Vendors don’t create secure
biomedical devices”
- FDA + Every Biomed Engineer
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• Very expensive to keep replacing equipment every time they get old
– FDA getting involved to hold manufacturers accountable to
make updates available for older equipment
– Cannot replace devices like PCs/Laptops (every 3 years)
• Plan for worst case scenario (equipment will not be
updatable/upgradeable in 3-5 years)
– Appliance that can restrict device communications and monitor
communication to and from devices
– Include these appliances in technology refresh planning for
medical equipment
• Get your department involved with professional organizations that
are the voice of the profession with FDA/TJC
– American College of Clinical Engineering, etc.
FDA involvement and what we can
do to help
